Unlocking a cellphone?

I've been trying to unlock a Motorola KRZR K1 for a friend.. for a few hours now and about ready to pull out my hair. It just dosen't want to stay unlocked or even unlock itself in the first place. The only possibilty at this point seems to demand one out of Fido or something.. however the phone has no provided at the current moment. It was given to him second hand, hes currently registered to Fido with a pay-as-you go plan. He wants to transfer his plan over to the KRZR.

Does the phone even need to be unlocked? If not, why not and could you explain how to make it operational on the KRZR? I live in Canada it is perfectly legal for me to unlock this phone.

With GSM, you can swap the SIM card to use another provider/phone number,
and if that doesn't work, then yes you need the device to be unlocked.

While traveling in Europe, I used a quad-mode T-Mobile phone and it worked well.
Attempting to use it in the States with that SIM only worked with the device unlocked.
Moving the SIM to another phone (AT&T+locked) flatly failed to get access.